ACCo 330 - Midterm - fall 07

ACCo 330 - Midterm - fall 07 - V"? Ecol»: dE gestion...

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Unformatted text preview: V"? Ecol»: dE gestion .thn-Maisan w: 351.11 yJEi‘xifis‘fl‘ié :4 _V H, 113E321 Malsgn School cf Business Student Name ID# OURSE: ACCO 330/2 SECTION A' SECTION AA' SECTION B' SECTION C C INSTRUCTORS: Dr. R. Kapoor and Dr. S. Mustafa MATERIALS ALLOWED: EXAMINATION: DATE: TIME: # OF PAGES: Midterm EXAM Sunday, October 14, 2007 9:30 — 12:30 10 (including cover page) 1) ENGLISH LANGUAGE / OTHER LANGUAGE DICTIONARY 2) NON—PROGRAMMABLE CALCULATOR — MAY NOT BE SHARED SPECIAL INSTRUCTIONS: READ THE INSTRUCTIONS BELOW INSTRUCTIONS 1. ANSWER ALL QUESTIONS IN THE ANSWER BOOKLET THAT HAS BEEN PROVIDED TO YOU. 2. BE SURE TO RETURN THE EXAM PAPER ALONG WITH THE ANSWER BOOKLET AT THE END OF THE EXAM. 3. ANY STUDENT WHO FAILS TO RETURN THE ENTIRE EXAM PAPER ALONG WITH THE ANSWER BOOKLET§S1 WILL BE REPORTED FOR CHEATING. 4. DO NOT TEAR YOUR EXAM PAPER OR YOUR ANSWER BOOKLET(S). 5. BE SURE TO PUT YOUR NAME AND STUDENT ID. NUMBER ON THE EXAM PAPER AND THE ANSWER BOOKLET. 6. START EACH QUESTION ON A NEW PAGE IN THE ANSWER BOOKLET. 7. IT IS VERY IMPORTANT TO WRITE THE NAME OF YOUR INSTRUCTOR AND SECTION LETTER/NUMBER ON YOUR ANSWER BOOKLET(S). Good Luck! Question 1 (12 Multiple Choice Questions) (20-25 minutes) (16 marks) Choose the Best answer of the following multiple—choice questions. Write your answers in the ANSWER BOOKLET. l. The balanced scorecard accounting report can be made more effective by developing it at a detail level so that employees: A) Can see how it is put together. B) Appreciate all the effort that goes into its preparation. C) Respect management for including them in its formulation. D) Can see how their actions contribute to the success of the firm. E) Do not feel left out. (1 mark) 2. Direct materials and direct labor costs total $40,000, conversion costs total $35,000, and factory overhead costs total $100 per machine hour. If 200 machine hours were used for Job #202, what is the total manufacturing cost for Job #202? A) $95,000 B) $75,000 C) $65,000 D) $60,000 E) $55,000 (1 mark) 3. Which of the following journal entries is correct if scrap is being incurred and sold for all common jobs in the amount of $600? A) C 3311 $- 6 U I] 13? ark—in- Pnj ce 3 S 11117 ento ry SE: 6 [I [I B) C'- ash $ 15 El U Finished Goo d-s. Imrentoryr $600 C) C ash .‘I: 6 U D Facto 13? CHI erhe ad 3: n” 00 D.)- C ash L}; 600 TINC: rk—in- Pm CE 33 Inventory! Li; El 0 Finished Goods Inventory $200 Factory Overhead E: DU E) None of the above. (1 mark) 4. The objectives of cost allocation are simply to: A) Motivate, provide incentive, and determine fair awards. B) Accurately define, divide and spread direct costs. C) Value, measure, and interpret cost data. D) Connect, communicate, and discern information. E) Define, refine, and re—define indirect costs. (1 mark) 5. The Insurance Plus Company has two service departments: actuarial (S l) and premium rating (82), and two production departments: marketing and sales. The distribution of each service department's efforts to the other departments is shown below: FROM TO Actuarial Premium M arketing Sales 5 1 0% 50% 30% 20% S 2 3 0% 0% 4 0% 30% The direct operating costs of the departments (including both variable and fixed costs) were as follows: Actuarial $50,000 Premium Rating $40,000 Marketing $60,000 Sales $0,000 The total cost accumulated in the sales department using the step method is calculated to be: [Note: actuarial (Sl) is allocated first] A) $ 70000. B) $107,857. C) $127,857. D) $137,857. E) $140,000. (2 marks) 6. Value Activities can best be defined as: A) Activities that firms in the industry must perform to improve a product. B) Activities that firms in the industry must perform in the process of converting raw material to final product, and including customer service. C) Activities that firms in the industry must perform in the process of closing down a product line, including customer service. D) Activities that firms in the industry must perform to consider ways of marketing a product. E) Activities that firms in the industry must perform in the process of considering new products, including customer service. (1 mark) 7. If a firm decided to reevaluate and reorganize the way it did business, in hopes of creating competitive advantage, by changing or decreasing jobs, the company would be using which of the following strategies? A) Redistribution. B) Reanalysis. C) Reengineering. D) Reevaluation. E) None of the above. (1 mark) 8. Abnormal spoilage: A) Is considered part of good production. B) Arises under efficient operating conditions. C) Is controllable in the short run. D) Is an unacceptable unit that should not occur under efficient operating conditions. B) Is part of inventory product cost. (1 mark) 9. L & L, CA, employs two full—time professional CAs and five other accountants. Budgeted direct salary costs include $150,000 for each CA and $40,000 per other accountant. For 2007 year, indirect costs were budgeted at $200,000, but actually amounted to $225,000. Actual salaries were $155,000 for each CA and $45,000 for each accountant. Direct and indirect costs are applied on a labor—hour basis. Total budgeted labor—hours were 5,000. If a client used 500 labor—hours, what are the budgeted direct—cost rate and the budgeted indirect cost rate, respectively? A) $100; $45. B) $100; $40. C) $ 90; $40. D) $110; $40. E) $107; $45. (2 marks) 10. In a local factory, employees are rewarded for finding new and better ways of changing the way they work. This company is motivating its employees to use what management technique? A) Benchmarking. B) Activity—Based Costing. C) Theory of Constraints. D) Continuous Improvement. E) Total Quality Management. (1 mark) Use the following information to answer questions (11 &12) The Parker Manufacturing Company has two production departments (fabrication and assembly) and three service departments (general factory administration, factory maintenance, and factory cafeteria). The following is a summary of costs and other data for each department prior to allocation of service department costs for the year ended June 30. !_ 1 General 1 Factory Factory ljactory _| 1 Fabrication Assembly Administration Maintenance Cafeteria | Direct labor costs 1 $1,950,000 $2,050,000 $90,000 $82,100 $87,000 Direct materials costs $3,130,000 $ 950,000 —0- $65,000 $91,000 1 Overhead costs $1,650,000 $1,850,000 $70,000 $56,100 $62,000 Direct labor hours 562,500 1 437,500 31,000 27,000 42,000 Number of employees 280 200 12 8 20 Square footage 88,000 72,000 1,750 2,000 {4,800 occupied The costs of the general factory administration department, factory maintenance department, and factory cafeteria are allocated on the basis of direct 1abor hours, square footage occupied, and number of employees, respectively. 11. Assume that Parker elects to use the direct method to distribute service department costs. The amount of factory maintenance department costs that would be allocated to the fabrication department wou1d be (Round final calculations to the nearest dollar) A) $0 B) $111,760 C) $106,091 D) $91,440 E) None of the above. (2 marks) 12. Assume that Parker elects to use the direct method to distribute service department costs. The amount of general factory administration department costs that would be allocated to the assembly department would be (Round final calculations to the nearest dollar) A) $0 B) $63,636 C) $70,000 D) $90,000 E) None of the above. (2 marks) Question 2 (25-30 minutes) (16 marks) The East Montreal Air Force Base trains new pilots and aircraft maintenance personnel. The base commander requires a quarterly report on the actual cost incurred to train a pilot and a maintenance person. Fortunately, for those who have to determine these costs, the air base maintains only four cost centers: staff administration, personnel services, pilot training, and maintenance training. The direct costs incurred, to train 10 pilots and 100 aircraft maintenance personnel, by each of these cost centers for the quarter just ended were as follows: Staff Personnel Pilot Maintenance Administration Services Training Training Salaries and wages $800,000 $560,000 $ 640,000 $400,000 Materials costs 150,000 100,000 1,300,000 200,000 Other costs 500,000 300,000 600,000 300,000 Staff administration costs are allocated to other cost centers in proportion to each cost center's salaries and wages. Personnel services costs are allocated to cost centers in proportion to the number of people employed in each cost center. For the quarter, 24% of the base employees were assigned to staff administration, 20% to personnel services, 24% to pilot training, and 32% to maintenance training. The accountant of East Montreal Air Force Base allocates the staff administration and personnel services costs to pilot and maintenance training using the reciprocal method and applying simultaneous~equations Required As the accountant of East Montreal Air Force Base, determine the cost of training a pilot and a maintenance person during the quarter just ended. (16 marks) Question 3 (40—45 minutes) (25 marks) Constructo Inc. is a manufacturer of furnishings for infants and children. The company uses a job cost system and employs a normal costing accounting method for cost accumulation. Constructo's work-in—process inventory at April 30, 2007 consisted of the following jobs. Accumulated Job No. Items Units Cost CBS]02 Cribs 20,000 $ 900,000 PLP086 Playpens 25,000 420,000 DRSll4 Dressers 25,000 250,000 The company's finished goods inventory at April 30, 2007, which Constructo evaluates using the FIFO (First—in, first—out) method, consisted of five items. Accumulated Item Quantity and Unit Cost Cost Cribs 7,500 units @ $ 64 each $480,000 Strollers 13,000 units @ $ 23 each 299,000 Carriages 11,200 units @ $102 each 1,142,400 Dressers 21,000 units @ $ 55 each 1,155,000 Playpens 19,400 units @ $ 35 each 679,000 Constructo applies factory overhead on the basis of direct labor hours. The company's factory overhead budget for the year totals $4,500,000, and the company plans to expend 600,000 direct labor hours during the year. During the month of May the company started two new jobs: Job STR077 (10,000 strollers) and Job CRG098 (5,000 carriages). At the end of April, the balance in Constructo's Materials Inventory account, which includes both direct materials and indirect materials, was $668,000. Additions to and requisitions from the materials inventory during the month of May included the following. Raw Materials Additions $638,000 Requisitions: Job CBSlOZ 155,000 Job PLP086 253,800 Job DRSll4 211,000 Job STR077 143,750 Job CRG098 252,000 Indirect materials 15,000 In addition, the company used $3,000 of office supplies during May. Question 3 (...C0ntinued) During the month of May, Constructo's factory payroll consisted of the following. Account Hours Cost CBSIO2 12,000 $122,400 PLP086 4,400 43,200 DRSll4 19,500 200,500 STR077 3,500 30,000 CRG098 14,000 138,000 Indirect labor 3,000 29,400 Factory Supervision 17,600 $221,100 In addition, the company incurred administrative and selling salaries of $300,000 for May. Listed below are the jobs that were completed for the month of May. Job No. Items Quantity Completed CBS102 Cribs 20,000 PLP086 Playpens 25,000 STR077 Strollers l0,000 CRG098 Carriages 5,000 Listed below are items that were sold and the unit selling price for the month of May. Items Quantity Sold Unit Selling Price Cribs 17,500 $100 each Playpens 21,000 $ 60 each Strollers 14,000 $ 50 each Dressers 18,000 $ 80 each Carriages 6,000 $150 each Other actual costs incurred during the month of May, included the following: 0 Rent (for factory, $30,000; for office, $10,000) - Deprecation (for factory equipment, $100,000; for office equipment, $20,000) 0 Utilities (for factory, $40,000; for office, $13,000) Required a. Compute the unit cost of each item manufactured by Constructo Inc during the month of May, 2007. (10 marks) b. Assume that the amount of over/under—applied overhead is significant. Prepare the appropriate journal entry to close out the manufacturing overhead account at the end of the month of May, 2007. (10 marks) c. Assume that the amount of over/under—applied overhead is significant. Compute the adjusted cost of goods sold for Constructo Inc for the month ended May 31, 2007. (5 marks) Question 4 (30—35 minutes) (18 marks) APCO manufactures various lines of bicycles; it employs a process—cost system using the FIFO method to determine unit costs. Bicycle parts are manufactured in the molding department. The parts are consolidated into a single bike unit in the molding department and transferred to the assembly department where they are partially assembled. After assembly the bicycle is sent to the packing department. Below are the annual data for the assembly department: ASSEMBLY DEPARTMENT ANNUAL COST DATA Transferred in from molding Assembly Assembly Assembly department Material Labor Overhead Prior period costs $ 82,200 $6,660 8,000 $11,900 Current period costs 1,237,500 96,580 149,940 260,190 ASSEMBLY DEPARTMENT ANNUAL PRODUCTION DATA PERCENT COMPLETE Assembly Assembly Assembly BICYCLES Material Labor Overhead Beginning WIP inventory .....3,000 70% 30% 80% Transferred in from molding department during year. . . . . ...45,000 Ending WIP inventory ........5,000 60% 40% 70% There was no spoilage, but at the end of the assembly process $5,000 worth of scrap was sold. Required a. Prepare a production cost report for the assembly department, to determine the cost of goods transferred out and the cost of ending work—in—process. (16 marks) b. Prepare the appropriate journal entries to properly account for scrap and transfer of costs to the Packaging Department. (2 marks) Question 5 (40-45 minutes) (25 marks) Champion, 1nc., began the current period with 3,000 units in work-in-process. These units were 40% complete. Costs attached to beginning work—in-process were $6,000 for materials, $9,000 for labor, and $10,000 for overhead. During the period, work was begun on an additional 8,000 units. Materials are added at the beginning of the process, labor is added when the units are 30% complete, and overhead is incurred uniformly. Units are inspected when they are 60% complete. Rejected units are returned to the 20% complete point for rework. Normal rework is 1% of the units surviving inspection. Units are inspected again when they are 75% complete. Rejected units are thrown away. Normal spoilage is considered to be 2% of the units inspected. There were 11,150 units inspected for rework and 250 units were rejected for spoilage. Spoiled units are sold at two dollars each. Ending work—in- process consists of 1,750 units, 90% complete. Current costs incurred were $16,000 for materials, $24,450 for labor, and $44,112.50 for overhead. ’ Required a. Using average process costing determine cost of goods completed, cost of ending work— in—process, loss from abnormal spoilage, loss from abnormal rework. (20 marks) b. Prepare the appropriate journal entries to properly account for spoilage, salvage, and transfer of costs to Finished Goods Inventory. (5 marks) 10 ...
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This note was uploaded on 10/16/2010 for the course ACCO ACCO 330 taught by Professor Mauricerossin-arthiat during the Summer '10 term at Concordia Canada.

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ACCo 330 - Midterm - fall 07 - V"? Ecol»: dE gestion...

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